Semi-retirement (aka Semi-FIRE) is becoming more and more popular in the FI community. The semi-retired life offers the best of both worlds: time freedom and meaningful work. So it is no surprise that many people on the path to financial independence and early retirement (ourselves included!) opt for semi-retirement to claim their time back sooner.
As a recent semi-retiree, I can confirm that the lifestyle semi-retirement offers is fantastic. I am really grateful for the freedom and work-life balance our family enjoys these days.
There are several different Semi-FI strategies you can use to semi-retire. The best thing is that with most of these strategies you will still become financially independent at some point in the future.
In the meantime, you get to design and enjoy your ideal lifestyle – long before you reach Financial Independence.
In this article, we’ll cover the ins and outs of Semi-Retirement:
- What it means to be semi-retired
- How to semi-retire – no matter if you are in your 30s, 40s or 50s
- 6 Semi-FIRE Strategies you can use to semi-retire
- Semi-Retirement and Financial Independence
- The advantages and risks of semi-retirement
- How to figure out how much you need to semi-retire
- Jobs and other types of work for semi-retirees
We have even created a handy (and free!) semi-retirement calculator to help you figure out how much you need to fund your semi-retired lifestyle.
I first published this article back in 2019 when we were still working full-time and chasing our dream of a semi-retired life. I’ve wanted to update it for a long, long time and add everything I’ve learned since it was first published. The final result is a pretty extensive article. You should see it as a resource you can come back to often rather than a “quick and easy” weekend read. And if you plan to read it in one sitting – get a nice, big cup of coffee, it will take a while! 🙂
Let’s get started!
What Does It Mean To Be Semi-Retired?
Semi-Retirement is a step between your full-time career and full retirement. When you are semi-retired, the income you generate becomes a secondary consideration. Instead, the focus is on a good work-life balance, a low-stress environment and work you really enjoy.
Being semi-retired isn’t simply a synonym for working part-time. Of course, most people will likely choose to work part-time in semi-retirement. However, it would also be a completely valid option to work full-time in a relaxed job that does not pay much but that you find fulfilling.
The priority for most semi-retirees is to create a more balanced lifestyle that allows plenty of time to look after their health, spend time with family and friends, and pursue hobbies and projects.
You can semi-retire at any age. Traditionally, many people in their mid-late 50s or early 60s chose semi-retirement to transition from full-time employment to traditional retirement. These days, semi-retirement is also popular with people in their 20s, 30s and 40s who want to spend time with their kids, travel and simply work less.
Semi-FIRE, aka Early Semi-Retirement
In the FIRE community, we often refer to semi-retirement as Early Semi-Retirement or Semi-FI. Early Retirement (the RE part of FIRE) implies a retirement date in one’s 30s, 40s or 50s (or earlier!). Semi-FI works just the same – it means that one semi-retires decades before the traditional retirement age.
With the FI version of semi-retirement, you save and invest (like anyone wanting to achieve FIRE would), but once you have saved enough to secure your future retirement, you start to downshift from your full-time career. All you need to do now is to cover your monthly living expenses. You are done saving and investing. Your nest egg will now continue to compound in the background (as long as you don’t touch it!) and get you to FI eventually.
In the context of Financial Independence, we define semi-retirement as the point at which you are done saving for retirement.
Most of us in the FIRE community have a savings rate of over 40%. This means that you can now earn 40% less (or 50%, 60% – whatever your savings rate was). If you have worked full-time up to this point (five days a week), you can now go down to three days! How good is that?
Just to be clear: Semi-FIRE is not an alternative to Financial Independence (FIRE), it is a step along the way. However, it isn’t just a means to an end. It’s a phase that offers a fantastic lifestyle. This is the reason Mr. Flamingo and I are in no rush at all to move on to the next phase of our FIRE plan. At this stage, we expect to stay semi-retired for at least the next 10-15 years.
Who Is Semi-Retirement For?
Everyone! I’m serious. I believe that Semi-FIRE is a great fit for a large percentage of the FIRE community.
Semi-retirement might be for you if you…
- are over the 9-5 rat race
- are looking for a way to work less and enjoy life more – as soon as possible
- have a family and want to spend time with your kids while they are young
- are on the path to Financial Independence but don’t want to wait another decade before you can claim your time and freedom back
- you don’t want to stop working anytime soon, you just want less stress and more fun in your everyday life
- discovered FI a little later in life and just don’t want to work full-time anymore
- have accumulated a decent-sized nest egg and want to start your own business (possibly part-time) or work on your own projects
Even if you are on the “standard” path to Financial Independence you should at least consider semi-retirement. You might be certain that you will stop working once you hit FI, but in reality, most people continue working in some capacity once they reach their FI number. A Semi-FIRE approach (using the strategies discussed below) might save you years in the rat race.
How to Semi-Retire in your 30s, 40s or 50s
There are many ways to semi-retire. In the context of Financial Independence, these are the main Semi-FIRE strategies that are worth exploring:
- Coast FI
- Flamingo FI
- The Partial Drawdown Strategy
There are also two additional strategies that are not genuine Semi-FI approaches but offer similar benefits, so we’ll explore them in this article as well:
- Barista FI
- The Part-Time FI Strategy
All of these strategies (with the exception of Barista FI) assume that it is your goal to reach FIRE at some point and that you want to be self-funded during your eventual traditional retirement.
Let’s go through the Semi-FIRE strategies one by one.
Semi-FIRE Strategy 1: Coast FI – the quickest way out of the rat race
Coast FI is the quickest feasible way to semi-retire. It consists of two phases: semi-retirement and traditional retirement.
Coast FI is the point at which you have saved enough to get to FI by the time you reach the traditional retirement age (usually age 65 or older) without having to make any further contributions to your nest egg. Once you reach this point you can stop saving and semi-retire. As long as you don’t touch your nest egg, it will generate enough income in retirement – thanks to the magic of compound interest.
If you want to learn more about this concept, start with our Coast FI guide which also explains how to calculate your Coast FI number.
Semi-FIRE Strategy 2: Flamingo FI – the best of both worlds
This approach combines the best parts of three different retirement lifestyles – Semi-Retirement, Early Retirement (FIRE) and Traditional Retirement.
Flamingo FIRE is essentially a version of Coast FIRE geared towards those who want to semi-retire but who also want to reach FIRE and have the option to retire early long before the traditional retirement age.
With Flamingo FI, you stop saving once you have accumulated half your desired FI nest egg. If your nest egg grows by 7% (inflation-adjusted) per year, you will reach FI after around 10 years of semi-retirement.
Start with these two articles to find out more about Flamingo FI:
Semi-FIRE Strategy 3: Coast-to-Target
This is the “Build Your Own Adventure” version of Coast FI. However, instead of coasting to FI until you reach your traditional retirement age, you coast to your target retirement age (the age at which you would like to retire). This is similar to what we did with Flamingo FI. We wanted to semi-retire by the time Mr. Flamingo turned 40 and then reach FIRE by the time he turns 50, so 50 is his target early retirement age.
Your Coast-to-Target number will be higher than your Coast FI number (unless you want to retire later than your traditional retirement age). This means you’ll delay semi-retirement a little while and, in return, you will reach full retirement a little sooner. It’s a trade-off.
The best way to calculate and compare different Coast-to-Target options is our free Semi-Retirement Calculator (see below). Our extensive Coast FI article includes more information about this strategy as well.
Semi-FIRE Strategy 4: The Partial Drawdown Strategy
This is an interesting strategy that combines Barista (see below) and Coast FI elements.
The idea is that you draw a small income from your nest egg (maybe 1-2.5%) each year before you reach your FI number. The rest of your nest egg will be left to compound until you reach your goal.
You will get to FI slower with this approach but the advantage is that you can draw a small income stream and supplement your semi-retirement job or business income.
Here is an example: Steve’s FI number is $1,500,000. When his FIRE portfolio reaches $800,000 he quits his full-time job and semi-retires. He doesn’t add any additional funds to his retirement portfolio.
Scenario A: Steve starts drawing a small income from his portfolio by withdrawing 2.5% in the first year and then adjusts this amount for inflation (2%) each year.
Scenario B: Steve leaves his nest egg untouched until he reaches FI.
This is what his coasting journey to FI will look like for the two different scenarios:
As you can see using a partial drawdown strategy delays Steve’s FIRE date by about 4 years.
Also, note that if there is a market downturn the annual withdrawals will likely do quite a bit of damage to Steve’s nest egg which will push his FIRE date out further.
Semi-FIRE Strategy 5: Barista FI
First, a word of warning: Barista FI does not meet our FIRE definition of semi-retirement (to be done saving for retirement).
A common misconception is that Barista FIRE and Coast FIRE are the same thing. They are not. While Coast FI will allow you to retire (and live completely off your investments) eventually, Barista FIRE will not lead to full retirement in most cases.
With Barista FI, you accumulate a nest egg that allows you to draw some passive income to cover part of your expenses. You can then semi-retire indefinitely and work part-time to cover the gap.
So a person with a nest egg of $500,000 and annual living expenses of $40,000 might semi-retire at 35, draw an income of $20,000 per year from their investments (using the 4% rule) and work part-time to earn the remaining $20,000 required.
The problem with this approach is that this person’s nest egg will probably never grow to the size required for Financial Independence. This means they will theoretically have to work part-time forever.
That is the reason I almost didn’t include Barista FI in this article – on its own it doesn’t usually lead to Financial Independence, so it doesn’t really deserve the “FI” in its name.
However, Barista FI can be combined with other strategies like Coast FI. For instance, you could build your nest egg ($500,000 like in our example above), then semi-retire at age 35 and draw $20,000 in passive income for 10 years. At age 45 you stop drawing an income and let your nest egg compound into your FI number. During this compounding phase you will need to cover all of your living expenses by working (hopefully still part-time).
This strategy could be useful for a family with young kids so the parents can spend more time with them early on and then work a bit more when they are in high school. In fact, this is a similar approach to Baby FIRE which is definitely a good option for anyone who is planning to start a family in the next few years.
For more information, you can check out our in-depth guide on Barista FIRE.
Semi-FIRE Strategy 6: The Part-Time FI Strategy
Just like Barista FI, this part-time strategy doesn’t really meet our semi-retirement definition (to be done saving for retirement). However, it is worth a mention as it shares many similar lifestyle factors with the other strategies described above.
With this strategy, you can opt for part-time work in an enjoyable and low-stress environment long before you reach any of the other milestones discussed above. You could also accept a job you really enjoy but that pays little or run a business even if it doesn’t make much money.
Consequently, your savings rate will probably be pretty low. That is not a problem as long as it is high enough to allow you to invest and still reach FI at some point in the future.
So with this strategy, you basically accept that your path to FI will likely be a slow and long one. In exchange, you get to work part-time and in a low-stress environment. It is the polar opposite of the “race to FI” many people in the FIRE community opt for.
Here is what this part-time FI strategy might look like:
Coast, Flamingo and Barista FI you front-load your retirement savings. With these strategies, your savings rate in semi-retirement could theoretically be 0%.
The part-time strategy is different. Notice how the overall income level with this strategy is higher than with the other strategies described above. This is because you have to earn more than just the amount you need to live on every year. The reason is that you still have to save for retirement.
The income numbers can fluctuate from year to year with this strategy (as shown in the chart) and you could also take some breaks along the way. However, overall your savings rate has to be high enough to allow you to reach FIRE at some point.
The real question with this part-time strategy is how low you can go. How low can your savings rate be to still get you to your destination (Financial Independence) by the time you want to fully retire?
Have a play with a calculator like Networthify to see how long your path to FI will be with different savings rates. Here is an example for a savings rate of 20%:
Which Semi-FIRE Strategy Should You Choose?
How do you know which strategy is the right one for you? Well, that all depends on your goals.
Most of these strategies work in a similar way. The idea is that you save and invest until you have accumulated a decent-sized nest egg. You basically front-load your retirement savings. You then semi-retire and
- let the nest egg compound in the background (without touching it) until you reach FIRE and/or
- draw some passive income to cover part of your annual expenses in semi-retirement
Are you happy to be semi-retired and work part-time until you reach the traditional retirement age (65 and over)? Then Coast FI or The Part-Time FI Strategy might be for you.
Do you want to retire early and be financially independent much earlier? Then you should consider Flamingo FI or build your own Coast-to-Target approach.
Do you want to draw an income stream from your nest egg to support your semi-retirement income? In that case, the Partial Drawdown Strategy or Barista FI might be worth considering.
How Much Do You Need to Fund a Semi-retired Life?
How do you know when you can stop saving? As you’ve probably guessed the answer is: it depends. There is no such thing as a Semi-FIRE number. How much you need to make your dream of a semi-retired life come true depends on a few factors:
- The Semi-FIRE strategy you choose
- Your age
- The balance of your investment portfolio
- Your savings rate
- Your living expenses (now and in retirement)
- Your investment returns over time
- If and when you want to fully retire
A 30-year old who is happy to work part-time until age 65 and chooses the Coast FI strategy will require a smaller nest egg than someone in their early 50s who wants to fully retire at 60.
To help you figure out how much you need to semi-retire with different strategies and scenarios we created our popular Semi-Retirement Calculator.
It lets you calculate:
- Your Coast FI and Coast-to-Target age and net worth numbers
- Your Flamingo FI number (and your age when you will get there)
- Your FIRE number (and how old you’ll be when you get there if you keep saving)
- When you could fully retire (reach FIRE) if you semi-retired and stopped saving right now
This calculator will help you to get an idea of how soon you could semi-retire.
To download the free calculator simply enter your details here (you will receive the calculator via email):
Benefits of Semi-Retirement
Semi-retirement is an amazing lifestyle and the advantages far outweigh the risks in my opinion.
Below I’ve listed the main benefits of Semi-Retirement as a lifestyle. There are, of course, many more advantages, but here are the seven things we love the most about the semi-retired life:
Semi-Retirement Offers Flexibility
Keeping a foot in the door makes you flexible. When you are semi-retired, scaling the amount of work you do up and down is pretty simple. Because you haven’t cut your ties with the workforce completely, you can easily move from a part-time position to a full-time role if your situation and financial needs change. Or, if you’ve been working as a freelancer or contractor, you could simply take on some more clients to generate more income.
I like to think of work in Semi-Retirement as a slider control with full-time work (think your typical career job, the 9-5, the rat race, corporate hell) on one end and full retirement on the other end. Once you are at the point where you can leave your full-time career and semi-retire, you can simply move the slider where you want it. It’s a flexible scale, so you can move it to the left and to the right as you see fit.
Early Retirement, on the other hand, is a bit like a dramatic mic-drop. You quit your job, you are done. It may feel good in the moment, but when you retire completely, you give up your flexibility. Circumstances change and you may find yourself in a situation where the FI math you based your decision to retire on no longer works.
Take the author of the excellent blog Living A FI for instance. After reaching FIRE in 2015 he quit his job and retired. However, things didn’t go to plan for him. Over the following few years, his relationship ended and he was diagnosed with a costly medical condition. His living expenses increased because he was now single and incurred extra costs. He needed to earn money again to supplement the income from his investments. So he found another job. He was lucky because his new employer didn’t mind the gap in his resume. This is a classic example of how people’s situations can change. Things happen. Relationships break up.
Of course, you could also always find another job if your circumstances change. However, depending on your qualifications and how long you were out of the workforce finding a new job may or may not be easy.
I much prefer the flexibility of a semi-retired life. I don’t have to worry about whether we will be able to find another full-time job if our expenses increase for whatever reason or one of us can’t work because of medical reasons.
You may now say that most people who reach FIRE continue working in some capacity. And that is, of course, true (and I’ve written about this many times). But why did they waste all those years working towards FIRE if they could have semi-retired and enjoyed more freedom a long time ago? Exactly.
Semi-Retirement Offers the Perfect Work-Life Balance
In 1930, the English economist John Maynard Keynes predicted that by 2030, we would all be working no more than 15 hours per week. He was even worried that we would have so little to worry about financially and so much free time that we won’t know what to do with all this freedom:
Thus for the first time since his creation man will be faced with his real, his permanent problem-how to use his freedom from pressing economic cares, how to occupy the leisure, which science and compound interest will have won for him, to live wisely and agreeably and well.John Maynard Keynes
Well, it’s not 2030 yet, but I think we all know that the 15-hour workweek certainly won’t be the norm nine years from now. What happened? Basically, consumption and unequal distribution of wealth got in the way.
It seems that we still have a long way to go on a societal level. But that doesn’t mean we as individuals have to wait. With the principles we discuss on our blog, you can create your own 15-hour workweek (or whatever number of hours you are comfortable with as long as it pays the bills). While society is still catching up to the idea of a shorter workweek, you can create the work-life balance you want thanks to the magic of Semi-Retirement.
I feel that three days per week might offer the perfect work-life balance for me personally. Mr. Flamingo, on the other hand, wouldn’t mind working four or even five days per week if the work is very low-stress. His secret dream is to be a handyman or gardener at a country club!
Side note: Interestingly, there is research that suggests that in a typical 8-hour day, the average worker is productive for less than three hours! The rest of the time is spent reading news articles, chatting to colleagues, making coffee and snacking.
Semi-Retirees Enjoy a Smooth Transition to Full Retirement
Another great benefit of Semi-Retirement is that you don’t need to worry about falling into a mental abyss. Adjusting to retirement is a challenge for many people. Losing one’s daily routine can be tough, especially when you go from a demanding 40+ hour job to zero. There is a reason it’s said that the most dangerous years of your life are the year you are born and the year you retire.
Going part-time as part of a semi-retirement strategy is completely different. You could, for instance, simply reduce your hours and work three days instead of 5 for a few years – either in your current job (if you enjoy it) or a new job or business. From that point onward you could simply keep dropping a day every few years until one day you decide you are ready for full retirement.
My dad retired last year after a long public service career. He is doing ok, but I can see that the abrupt change came as a bit of a shock to the system. A smoother transition to retirement would have been much better for him.
Semi-Retirement Strengthens Your Sense of Purpose
Meaningful work offers a sense of purpose. Semi-Retirement is the perfect opportunity to find work that is in line with your values and goals. Because how much money you can make is secondary in Semi-Retirement, you can focus on doing something that fulfils you (and consequently won’t feel like “real” work).
In my late 20s, I left my corporate job to become a freelancer. However, it wasn’t in a field that I was passionate about. This lack of passion combined with the loss of routine was detrimental to my mental health. I learned the hard way how important a sense of purpose really is. You can read all about my experience here: Our Story Part 2 – Mulled Wine and Online Gambling
Retirees often struggle with the loss of purpose, especially when their career used to be the focal point of their life. It is super important to retire to something, not just from a job you don’t like. The ability to design a lifestyle you enjoy and that gives you meaning and purpose is a really important benefit of Semi-Retirement.
Avoid One-More-Year Syndrome By Semi-Retiring
The dreaded one-more-year syndrome is something most people face once they have reached full Financial Independence. Hanging up your boots when you are 65 is one thing, doing so in your 30s, 40s or even 50s is quite another. Stopping work completely during your peak earning years, when everyone around you is still climbing the career ladder is scary. “What if I haven’t saved enough?”, “What if the markets crash the moment I resign?” are common thoughts in this situation. We tell ourselves that we’ll just keep going for one more year, just to be on the safe side. And one year can easily turn into two, three or even five years.
Semi-Retirement, on the other hand, doesn’t feel like you are jumping off a cliff. You can simply drop a few days per week in your job (if you enjoy it), or take a little break and then find a new part-time job, start your own business or become a contractor. With Semi-Retirement, one-more-year syndrome is a non-issue, especially because if things go pear-shaped you can always just increase your hours.
The Practical Advantages of Semi-Retirement
Most of the practical elements of being a member of society are a lot simpler when you still work (at least in some capacity). Here is a list of things that are easier to manage as a semi-retiree:
- Taxes: Working full-time is actually pretty inefficient. You will likely move into a lower tax bracket as you only work part-time. This means that going from 5 days to 3 days does not really mean 40% less income.
- Getting a home loan: As long as you have some kind of regular (active) income, you will probably be able to get a home loan. Lenders are very wary of potential borrowers who don’t have paychecks or proof of business income, no matter how much money they have in their savings account.
- Rental agreements: The same is true when you are renting. Most landlords will choose a tenant with a regular income from a stable job, even if it is just part-time. As a semi-retiree, you won’t have too many issues securing a rental compared to someone who is fully retired.
- Investments: You probably won’t be adding much to your retirement nest egg when you are semi-retired. However, you might still have an investment property with a loan that you are paying off. Unless the property is positively geared (creating a surplus), paying off the loan requires additional cash flow. So some extra income from paid work will be very handy.
- Health insurance and social security: In countries like Australia and the UK, everyone benefits from universal health cover, regardless of one’s employment status. Things are a bit different in most European countries (like Germany) and the US, where your health insurance cover and social security benefits are usually tied to one’s job. So holding a part-time job, even if it is just for a few hours per week, makes things a lot easier in this respect.
- The “What do you do?” conversation: When you are semi-retired, you can simply tell people you are working part-time or working as a freelancer/contractor/starting your own business – because it is the truth. No awkward, jealousy-inducing “I’m retired” conversations. As a semi-retiree you are just a normal productive member of society, you just take things a little easier than most.
- Finding a job: I’ve talked about this above but it deserves another mention here. One of the most practical advantages of Semi-Retirement is that you won’t have any gaps in your CV. If for whatever reason, your situation changes and you want to or have to find another “proper” job, it won’t be a big problem.
Risks and Disadvantages of Semi-Retirement
There are, of course, also a few potential trade-offs to consider with this lifestyle:
- Time: If you choose a path to FIRE that involves semi-retirement, the journey will be longer. It will probably be a lot more enjoyable, but longer nonetheless. That’s a tradeoff to consider.
- Work: A possible disadvantage is that you still have to work in some capacity, whether you want to or not. If your goal is to retire early and not work ever again, then this path is simply not for you.
- You can’t touch your nest egg! With the exceptions of the Partial Drawdown Strategy and Barista FI all the semi-retirement strategies are based on the idea that you won’t touch your investments for a long time to allow them to compound in the background. That’s definitely something to consider.
- Career: If you work part-time or opt for a low-paying, low-stress job, you won’t have the same career (and income) progression as someone who is 100% committed to their full-time job.
Semi-Retirement Jobs: How to Earn Money As a Semi-retiree
The options here really are endless. Being semi-retired means that you don’t have to earn as much money as you used to in your full-time career. This means that the financial pressure is a lot lower and there are many ways you could cover your living expenses doing something you find fulfilling. Here are some ideas:
- Keep your job (if you enjoy it) on a part-time basis or as part of a job-share arrangement
- Simply negotiate more flexible working hours in your current role
- Find a new job (part-time or full-time)
- Start a business in a field that interests you
- Start a new career in a different field
- Kick off your semi-retired life with a mini-retirement or sabbatical
- Become a digital nomad
- Work as a freelancer
- Find a seasonal job and travel for the rest of the year
- Do some consulting work in your field of work (consulting roles often pay a lot more, so you would only work for part of the year!)
- Turn your former side hustles into your main income source
- Take on several part-time gigs to cover your expenses (Airtasker, dog walker, house sitter, Airbnb host….)
As you can see there are many, many options! And because you don’t need an insane savings rate anymore, you can also try different things until you figure out what you enjoy the most.
What does a Semi-Retired Life Really Look Like?
As with most things in life, the answer is “it depends”. What your semi-retired life will look like largely depends on your stage of life, your non-work responsibilities (like kids) and your interests and passions.
Of course, a single in their 50s will have a different lifestyle to a couple with a baby in their early 30s. I have spoken with many early-retirees over the years and their stories are all different.
Mr. Flamingo and I semi-retired at the ages of 35 and 39 respectively. We have young kids, so that obviously impacts what our semi-retired life looks like. We have opted to work part-time (2-3 days per week) so we get to enjoy at least four family days per week. This has been working really well for us.
As our kids get older we might mix things up again. Mr. Flamingo dreams of starting his own landscaping business when our kids start school and he has more time. At the moment, maximising family time is our priority and semi-retirement has allowed us to do just that.
Feel free to join our private Semi-Retirement and Alternative FIRE Strategies Facebook group to meet some like-minded people who are either on the path to semi-retirement or already there. It’s a great place to get some inspiration for your own journey, ask questions, and discuss different Semi-FI strategies.
Semi-retirement is more than just the stage between full-time work and retirement. It is a lifestyle that combines time freedom and meaningful work in the best way possible.
Whether you are looking for a faster way out of the 9-5 rat race, want to spend more time with your kids while they are young, or simply want to start working less and living more, semi-retirement might be the answer you’ve been looking for.
And remember: Semi-retirement is all about creating your perfect work-life blend, so it’s ok to adjust your path along the way.
Are you considering semi-retirement?
Which Semi-FIRE strategy do you like best?
What will your semi-retired life look like?